tv Nightly Business Report PBS June 4, 2013 6:30pm-7:01pm PDT
>> this is "nightly business report" with tyler and suze, brought to you by thestreet.com, tools for an ever changing financial world, our dividend stock adviser, guides and helps generate income during a period of low interest rates. real money helps you think through ideas for investing and trading stocks and action alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media, we are the street.com. >> streak snapped. the dow's record tuesday run is over. and volatility is back. but this friday, it could be the day to watch. >> haunted by the past, what is
at stake for bank of america shareholders as the firm heads to court and tries to chip away at past mistakes. >> and reverse mortgages, why these loans are hurting some american seniors. the group they were designed to help. we have all that and more tonight on "nightly business report" for tuesday, june 4th. >> good evening everyone, tuesdays may never be the same on wall street after a record 20 tuesdays in a row of gains for the dow average, the blue chip stocks fell today as concern grows about the federal reserve's plans to trim the size of itsz asset buying stimulus program. the markets moved up and down and up again. but not enough to keep that streak alive. there were losses across the board and here they are, the dow down 76 points and the nasdaq lower by 20 and the s&p 500 was off by nine. we tracked all the action today from the new york stock exchange. >> another day, another 204
point swing in the dow. stocks were flat through the morning but weakened midday with the dow down 154 points before regaining half of the losses before the last hour. they were larger losses elsewhere, with home builders, bio tech, and emerges markets down again. interest rate sensitive sectors like real estate investment trusts had to bounce. ester george was the latest to weigh in on whether the fed should continue to buy bonds, she had the u.s. economy has continued to heal and she supported slowing the pace of asset purchases as an appropriate next step for policy. >> it has been two weeks since the federal reserve minutes came out, with a lively debate on when to taper the purchases of bonds, since then, stocks and bonds have been more volitile.
there was an historic high and since then it's off 3% and now it's two early to say if it's a long-term inflection point, or a blip, but short-term, it accomplished the fed's goal of everyone guesting used to the idea that the end is somewhere down the road on bond purchases. for "nightly business report," new york stock exchange. >> our market guest tonight said that the stock market is vulnerable and he expects it to reset as much as 10%. he sap, let me ask you this, first of all, what happened today and do you notice some kind of change in investor sentiment? >> i think what we are doing is really going through a digestion phase, it's moving down to the 1600 level, let's face it, we moved into an all new time high period and what investors are
doing is taking short-term profits. >> what should they do with the money if they have not made a mov move? >> i think it's best to just hang in there, mainly because who knows how deeply we will decli decline, with so many investors wanting to be more exposed to equities, plus, if even if we have a decline of 5% to 10%, it takes two months to get back to break even. so you will probably miss it. >> on friday, we have a jobs report coming out, if it's a robust number, could all of the these worries about the stock market go away, or if it's a weak number, what is the market reaction, what is your prediction? >> an interesting dilemma on friday. right now, wall street is looking for 165,000 new jobs. our estimate is in that area as
well, i think that if we end up with slightly less than that, than wall street may breathe a sigh of relief that we will not have an acceleration of the tapering of the fed's bond buying program, therefore the cause for the most recent decline could end up being pushed out a little bit further. if we end up with a substantial stronger employment number than again, we may have a bit of a concern, because then it increases the likelihood that the fed will take their foot off the gas. >> sam, let me turn your attention to the 20 tuesday win streak that was snapped today and get you to talk about market a nomolies, we tend to make patterns, and it could be niave, when is it making sense and when
is it just noise? >> that is a good point, i sourt of equate it to cloud patterns that may hang around for a while and then end up dissipating over time, i tend to say that old sayings like sell in may and go away. are seasonal in nature, they have reason behind them. and if you look over the longer term, they do have repeat abilities. sell in may, go away. the market is up an average of 7% in november through april, and 1.2% in may through october. >> is there a way that investors should use this information? could you use it to your advantage if you study all the wall street thing sns. >> there are two ways that i think you can benefit from this. first off, if history says, volatility is approaching, pretend you are listening to a pilot that says, fast enyour safety belt. you do not become your
portfolio's worst enemy. with sell in may and go where? i recommend that he investors move toward the semiannual approach, that would add up to 4% points per year to your portfolio's return while reducing volatility. >> sam, this is why we love you, you have all the trivial information that pays off for you big time, perhaps. thank you, so much. chief equity strategist. >> well, five years after the financial crisis that led to the market bottom, battles continue over what went wrong and which banks are to blame for selling risky securities that went bad. bank of america is one of the banks. and even though it settled claims with burned investors, it's now back in court. they look at what this means for b of a and the shareholders. >> bank of america is the latest in a line of fire.
this week, investors led by bank of new york melon will try to convince a judge that a 2011 settlement totaling $8.5 billion is fair. and should be binding for all investors. the problem, after the deal was signed two years ago, some kwaef investors have come out of the woodwork challenging it and claiming it's not enough. aig he said it alone deserves an additional $10.5 billion for losses it sustained. in new york state supreme court tuesday, lawyers argued over how to calculate the settlement and whether they did it fairly. suburb iss such issues are hardly news. here is early 2012. >> there's no way that if you
know what kn know what we knew now, you would have taken the risks. so, that is up side from here. >> in all, bank of america has paid out nearly $50 billion in settlements, while the payouts mean the bank's bottom line could suffer in the near term, a clean slate is worth real money. paying $1.6 is billion to solve a lawsuit and $7 million in market cap in one day. cleaning up the current lawsuit seen as the last big one on the horizon could do the same. >> the earning power of this company should be in the $1.50, and if the maco environment, interest rates, loan growth, the if those speed up, there could be up side to the $1.50. for shareholders the relief won't come overnight, this hearing will take two weeks at least. a ruling several months.
"nightly business report" new york. >> another bank in trobl, hsbc, new york's attorney general is suing the giant british bank saying it ignored a state law designed to keep struggling home owners from falling into foreclosure. >> meantime, there was good news about home prices in april. more of it. core logic reports that prices of homes sold that month rose more than 12% from the same month in 2012. the largest one month increase in prices since the go-go real estate days of 2006. >> many american seniors have relied on their homes and reverse mortgages to finance their retirement, but now though loans are under criticism. despite a steady extreme stream -- stead stream of commercials speaking for them. >> it used to be that a home was like a savings account, gaining
value as you slowly paid down the mortgage. you could sell is it and fund your retirement or take out a reverse mortgage, which the pitch men make sound so easy. >> have the money to pay bills or simply enjoy your requirement more. >> the product was introduced 25 years ago for those at least 62 years old. >> the reverse mortgage is money that is waited to be paid back until you leave the home. >> there's no payments other than taxes and insurance, and interest and fees are piled into the mortgage itself, upon the home owner's death, the home is sold with the proceeds going to the lender. >> it sounds good that you could live here without making mortgage payments. >> robert and his wife took out a reverse mortgage at the end of 2008, to pay off the current mortgage and relieve them of monthly payments. she was ten years older than robert and died, her's was the only name on the mortgage. >> in the case of some couples,
they make a decision up front to remove one couple off the title, to get more money qualify for the mortgage. >> he was told that he could be added to the mortgage after his wife he's death, that was not the case. to stay, he would have to pay $300,000 back to the lender and the home is now worth half that. >> they put it foreclosure. >> they said that they never shove been in a reverse mortgage in the first place. >> it was contemplated as something you can draw money over a long period of time. as a way of supplementing your income or providing it where you had no other. now, i think people are looking to it as a quick fix. >> the trouble today is more seniors are entering retirement with less savings and less home equity more debt. the wrong combination. >> if it's a quick fix, it may not be the thing you are looking for. >> bennett is fighting the
foreclosure and knows he could lose his home. >> the reverse of what he was trying to do when he agreed to the mortgage. for "nightly business report." maryland. >> still ahead, do you like ordering room service at your hotel? one big new york city hotel is dropping it. will others follow suit? first, let's look at how the international markets faired today. >> we begin to market tonight with monster beverage. the energy drink company said that sales jumped 8% in april and may, and it was called encouraging in light of recent
negative media on energy drinks. the shares gained and trading was three times normal volume. shares up sales of force.com tumbled after it was announced that it would buy exact target. the combined firm will create a platform on, but investors sold the stock on concerns that how the deal would impact projects. but exact target's stocks went up on 100 times normal volume. >> dollar general reported profits in line with investor expectations and revenueses as well, but it trimmed the full year guidance, the discount retailer said that the payroll tax is weighing on the customers. investors sold off on the revised forecast. >> and j.c. penney gained on a jpmorgan analyst note saying
that july sales may compare with last year's turnover, he is expecting single digit in the mid dingell digit range for the sales growth in the fourth quarter, and j.c. penney gained more than 17% to close at $17.96. >> what your children have been watching in your living room has been the latest battle in the tv service wars. and amazon.com may be a game changer. for locking in those young viewers. >> for parents looking to entertain their kids, amazon prime just became a lot more appealing. getting a new advantage over netflix has kids programming becoming the new battleground for the future of television. amazon and viacom announced a multi-year video licensing agreement, giving subscriber's to amazon's primary plan access
to many shows. amazon has out bid for some shows, this is the highest profile deal yet, as it spends big to take on netflix and drive viewers. >> amazon is similar to walmart, it's a volume game, the more vop it can pass through the system, the more profitability it should enjoy longer term. >> instead of renewing the contract, netflix add for disney shows. i asked if failing to secure viacom's kids show would be a problem? >> you know, we have shows that come in on the network, and come out on netflix, if you are a parent and your child is looks for blue's clues, that is definitely a problem, but we have other shows. >> as they are trying to set their content part, we will see if any of them invest to create
original kids' shows. >> from one game changer to another possible game changer. starting in august, the new york hilton, one of new york city's biggest hotels will no longer offer room service and in its place will be a self service eatery in the lobby with grab and go snacks. will other hotels start to do the same? joining us now to ponder that is mark orwall, he is the international editor at travel and leisure magazine, nice to have you. >> nice to be here. >> don't they run a risk here in the hilton of new york city of antagonizing travelers that want to have a hamburger and a beer before they go to bed? >> or those that have to catch an early flight and the restaurant is not open yet. the grab and go concept, little shop down in the lobby is as appealing to a business traveler as a 7/11 starting to have hotel rooms. this is not a good idea for business travelers but the ceo
of hilton just said, they are not making money on it and the majority of their guests don't use the room service. >> do you think that other hotels will starts to do the same, even though the points that you make are well taken, that it will be a trend in travel? >> i hope that is not the case, but we have been seeing that, i'm noticing there's a greater separation from the hotels that offer fewer services and the luxury hotels, my fear is that we will see fewer of the middle ground hotels. hotels like the hilton mid town that have, you know, good rates for a big city like new york and offer all the services that a traveler and a business traveler in particular could need. so i was curious, mark, it stuns me to learn that they can't make money on a $20 hamburger, or a $25 omelte or whatever it is, i understand that it's cooked and
delivered. >> but it's a personnel intensive service that they offer. and after breakfast, where the big rush is in room service, there are fewer and fewer calls for room service, but i still have to be staffed as if you are going to be getting a lot of calls. so, but i think you are right, there's ways around this, for example, having limited hours, or maybe just from, you know, 8:00 until midnight instead of 24 hours. that sort of thing. i hope that they won't, anybody will see this as a trend. >> traveling is not fun anymore, and we used to say the same thing about the airlines we were shocked when they were going to charge for your luggage, and now everyone does it. do you think that a hotel like the hilton will lose business because of the ending the room service? >> well, there were guests of the hotel that said, they would not consider staying at a hotel that does not have room service and i would say that generally speaking, most of the people who
care about room service the most would be the business travellers and they are the ones that have the money to spend. why antagonize a group of high paying clients that need that service. i -- i'm at a loss to explain it. >> very quickly, do they or others who may follow suit, risk losing the 3 or 4 star or five star rating that they get? >> yes, this ratings group look at all the services offered and if they feel that the lack of room service takes away from the quality they can be knocked down in rating. that means more potential for losing money by that hotel. >> all right, mark, thank you very much. great to see you. mark is international editor for travel and leisure. >> and coming up in the program, the apepsi is expanding to a new market ground that is not always talked about. first a look at how markets and
currency and how it faired today. >> u.s. investors will be keeping a close eye on japan tomorrow, that is when the prime minister abe plans to unveil a new round of reforms aimed at reviving japan's economy, among the expected moves are increases in stock purchases by national pension plan and the easing of rules governing internet businesses and the special economic growth zones throughout the country. >> you may not have heard much about the cola wars in the u.s. but they have amping up in emerging markets it was parent when coca-cola opened up in the country of miramar. >> the beverage giant plans to invest $200 billion over the
next five years in the country. >> although the population is poor and the infrastructure lacking, coke and other consumer companies want to be there early. knowing there soon will be another 60 million consumers as the economy grows. >> it's a wonderful opportunity for my company, our brands, and it's a wonderful opportunity i think for the people of the country who will join the world community and it will be -- it will contribute to the middle class for the next decade. >> the u.s. began easing sanctions on the country. automaker ford, and visa and coke are attempting to get in on the ground early and china, the neighbor is more active, helping to construct an oil and gas pipeline nearly 500 miles long.
the road to democracy can be bumpy, long simmering religious tensions have been kept at bay, while there's risks companies like coke feel the rewards will be high. with the opening of the plant, there's only two countries in the world where coke is not sold. north korea, and cuba. which is amazing in itself, only two countries, tyler we talk about consumer spending helping the economy grow and here you have hundreds of thousands of consumers in the emerging markets happy to buy the products. >> these are affordable luxuries and i have a feeling you can get a rum and coke somewhere in cuba if i had to guess. >> i think you are right. that is "nightly business report" for tonight, thank you for watching and remember, this is the time of year your public television station asks for your support. >> on behalf of the public television station, thanks for giving that support. good night everyone, we hope to
see you back here tomorrow evening. >> "nightly business report" has been brought to you by thestreet.com. multi-media tools for an ever changing financial world, the dividend stock adviser guides and helps generate income during the period of low interest rates and helps educate beginning and seasoned traders. action alerts plus is a charitable trust portfolio, that provides trade by trade strategies. online, mobile, social media, we are thestreet.com.
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